BRISTOL-MYERS TO PAY $2.1 MILLION FOR FAILURE TO DISCLOSE AGREEMENT TO DELAY GENERIC ENTRY OF PLAVIX

On March 26, 2009, Bristol-Myers Squibb Company (“BMS”) agreed to pay a fine of $2.1 million for failing to inform the Federal Trade Commission of oral agreements reached with Apotex, Inc., regarding potential generic competition to its drug Plavix. BMS’s conduct violated a 2003 FTC Order and the Medicare Modernization Act, which requires that certain patent lawsuit settlment agreements be accurately reported to both the Commission and the U.S. Department of Justice (“DOJ”). The complaint alleges that BMS failed to disclose that, as part of a patent settlement in which Apotex agreed not to launch its generic version of Plavix for several years, BMS also orally said that it would not compete with Apotex during the first 180 days after Apotex entered with its new generic drug.

Allegedly, BMS entered into agreements with potential generic drug manufacturers to delay their entry into the market in exchange for payments from BMS.

Reportedly, the FTC discovered from Apotex that the written agreement between Apotex and BMS filed with the FTC was not the complete understanding between the parties to the agreement. Yet, BMS certified to the FTC that the written agreement to settle the patent infringement lawsuit was the complete understanding between Apotex and BMS. Faced with conflicting certifications, the FTC alerted the DOJ’s Antitrust Division, which convened a grand jury to investigate. Ultimately, on June 11, 2007, BMS entered a plea of guilty to two counts of perjury for failing to disclose that it had indicated to Apotex that it would not launch an authorized generic in competition with Apotex for a certain period of time. BMS subsequently paid $1 million in criminal fines.

The filing of the complaint and the fine imposed by the Commission is noteworthy for several reasons. For one, this is the first time that the FTC has fined a company for violating the Medicare Modernization Act reporting requirements. Second, the FTC clearly articulates that the primary goal of the Act is to ensure that parties provide a complete description of the agreements they are reporting. Third, firms submitting required filings with the FTC must understand that they have an obligation to be complete and honest in their filings. Fourth, oral agreements or understandings cannot be omitted from the filing. By imposing such a large fine, the FTC is demonstrating that it takes the knowing failure of a company to fully comply with the Act very seriously.

The Commission vote approving the complaint and consent order in settlement of the court action was 4-0. It was filed in the U.S. District Court for the District of Columbia on March 26, 2009.

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